IN THE NORTH WEST HIGH COURT
MAFIKENG
CASE NO.:1365/11

In the matter between:

PETER GEYSER						1ST APPLICANT
WILLEM ENSLIN						2ND APPLICANT
GERRIT VAN SCHALKWYK				3RD APPLICANT
NEIL GEYSER							4TH APPLICANT
PURPLE BOX (PTY) LTD					5TH APPLICANT

IN RE THE APPLICATION IN TERMS OF SECTION 6(1) OF ACT 42 OF 1965:

TWIN OAKS DEVELOPMENT (PTY) LTD		APPLICANT
and
DDG BUILDING CONTRACTORS CC			RESPONDENT

CIVIL MATTER

KGOELE J

DATE OF HEARING			:	24 MAY 2012
DATE OF JUDGMENT			:	29 JUNE 2012

FOR THE APPLICANT		:	Advocate J.F. Roos (SC)
FOR THE RESPONDENT		:	Mr W. Van Heerden

JUDGMENT

KGOELE J:

[1]	The applicants applied for an urgent application against the respondent for an order in the following terms:-

1.1	That the forms and service provided in the uniform rules be dispensed with in terms of Rule 6(12) and that this application be heard as an urgent application;
1.2	That the first and the fifth applicants be given leave to intervene in the application brought by the above mentioned applicant (Twin Oaks Developments (Pty) Ltd) in terms of Section 6(1) of Act 42 of 1965 as the second to the sixth applicants;
1.3	That the costs of this application be cost in the main application.

[2]	As a background, Double D.G. Building Contractors (Double D.G.) instituted an action against Daniel Francois Malan, Jacques Malan, Niel Geyser, Willem Eslin, Pieta Geyser and Gerrit Van Schalkwyk (1st, 2nd, 3rd, 4th, 5th and 6th defendants respectively), arising out of a written agreement entered into between Double D.G. and Twin Oaks Development (Pty) Ltd (Twin Oaks) in terms of which the afore- mentioned defendants, as collateral security for the due compliance by Twin Oaks, bound themselves in solidum, as co-principal debtors in favour of the plaintiff, as sureties for the due compliance of Twin Oaks towards Double D.G. in terms of the agreement.

[3]	Subsequent to the defendants entering their notice to defend, plaintiff applied for summary judgment against all of them.

[4]	The summary judgment application was heard by the Honourable Acting Judge Gutta (as she then was) and the order which was couched as follows was granted on the 04/11/2010:-

“Accordingly, I make the following order:-

4.1	As against the first and second defendants

4.1.1	The plaintiff is to make available to the first and second defendants copies of the documents referred to in the notice in terms of rules 35 (12) and 35 (14) within 5 days from the date of this order;

4.1.2	The first and second defendants are to file their opposing affidavit if any, to the application for summary judgment, within 5 days after receipt of the documents referred in the notice in terms of rules 35 (12) and 35 (14); 

4.1.3	Either party may set the matter down for hearing on a date to be arranged with the registrar;

4.1.4	Costs are to be costs in the application for summary judgment.

	4.2	As against the third to the sixth defendants:-

4.2.1	Summary judgment be and is hereby granted against the third to the sixth defendants pro-rata to their shareholding in the company, as provided for in clause 8.2 of the written agreement attached to the particulars of claim, as follows:-

(a)	Payment in the amount of R12 163 916-44;
(b)	Interest on the amount of R1 750 000-00 at the rate of 15.5% per annum calculated from 1 July 2010 to date of payment;
(c)	Interest on the amount of R10 413 916-44 at the rate of 25% per annum calculated from 1 June 2010 to date of payment; and 
(d)	Cost of suit. 	
 
[5]	The third to six defendants applied for a rescission of judgment which was set down for hearing on the same date when this matter was heard.  On this day 24/05/2012, by agreement between the parties, the judgment was rescinded and the applicants were granted leave to defend the matter.

[6]	Meanwhile, whilst the rescission application was still on, Double D.G. filed an application for the liquidation of Twin Oaks under case number 1440/2010.  Twin Oaks opposed the application.  On the 29 August 2011 Double D.G. filed a fresh application for liquidation of Twin Oaks based on the same facts as set out in the afore-mentioned application for liquidation under Case No: 1365/2011.  On the 13 September 2011 the first application for liquidation was withdrawn by the applicant.

[7]	The second liquidation application remains pending in this court.  On the 22/05/2012 Twin Oaks filed an application in terms of section 6 (1) of Act 42 of 1965, for stay of the proceedings and the referral, or transfer of the dispute between Twin Oaks and Double D.G. for arbitration in terms of the agreement between the parties.

[8]	The purpose of the current application as brought by the applicants, is to intervene and be joined as the second to the six applicants in the matter mentioned in paragraphs 7 above, seeking the same relief as set out therein, being the referral of the dispute between all the applicants and Double D.G. in respect of its alleged claim against Twin Oaks as well as second to six applicants to abitration.  After hearing submissions from both counsels on the issue regarding urgency of the matter, this court ruled that the joinder application was regarded as semi urgent and further that because it was enrolled on the same date as the main application, the application can be proceeded with first.

[9]	The five applicants submitted that they have an interest in the relief sought for the following reasons:-

9.1	The second, fourth and fifth applicants are 30% shareholders in Twin Oaks. Double D.G. issued summons against the first to fourth applicants alleging that they are sureties in terms of the written agreement which forms part of the dispute between Double D.G. and Twin Oaks as well as some of the present applicants.  In terms of the said agreement the second and fourth applicants are sureties and the first and third applicants were sued by Twin Oaks alleging that they are sureties whilst that is not the case.

9.2	The fifth applicant, Purple Box (Pty) Ltd, (Purple Box) of which the first and third applicants are the shareholders, holds the shares in Twin Oaks and not the first and third applicants themselves.

9.3	Double D.G. erroneously and for reasons set out in an application for rescission of default judgment, obtained default judgment against the first to fourth applicants on the basis of the alleged suretyship for the same claim as Double DG relies against Twin Oaks.

9.4	In the application for rescission of the summary judgment granted by default against ourselves (the intervening applicants), various defences were raised against the alleged claim by Double D.G.  Inter alia the defence of arbitration was raised therein being the first opportunity that the applicants had to raise this defence.  (The applicants referred to the application for rescission and the contents thereof as incorporated herewith and relied upon by the applicants for the purpose of indicating the defences raised and thereby indicating the huge dispute between the parties regarding the alleged claim by Double D.G.) 

9.5	Double D.G. through its attorney conceded during June 2011 to the arbitration in the face of the fact that at that stage it had already filed an application for liquidation of Twin Oaks.

9.6	Double D.G. does not honour its agreements but is prejudicing the applicants as well as Twin Oaks by filling an application for liquidation and doing nothing about it.  Since the first liquidation application has been launched by Double D.G. on 22 June 2010 serious prejudice has been suffered by Twin Oaks and the applicants being shareholders and sureties.

[10]	It was further submitted by the applicants that it is not in the interest of justice or any of the parties involved that the same dispute between the alleged sureties and Double D.G. be tried and resolved through arbitration whilst the same dispute is being resolved between Double D.G. and Twin Oaks by way of an application for liquidation.  This according to the applicants is clearly an abuse of the process of the courts.  It is according to the applicants, not only in the interest of justice, but also convenient for the purposes of saving costs and multiplicity of disputes resolving that all the issues be tried and resolved in the same action or application.

[11]	The respondent’s counsel on the other hand submitted that for the applicants to succeed in their application they are required to show prima facie direct and substantial interest based on legal ground.  According to him, whether there is an agreement between the sureties and Double D.G. to go to arbitration is irrelevant.  Whether there is an agreement between Double D.G. and Twin Oaks to go to arbitration is also irrelevant.  According to him the only issue that this court has to decide is whether the shareholders of a company have any rights / interests flowing from the contract which was concluded by the company Twin Oaks with somebody else (in this matter Double D.G. ) or not.  He submitted that the answer to this question is that the shareholders have no rights whatsoever, as they cannot participate in the contracts concluded by the company or the control of the company itself.  Therefore the application is to be dismissed with costs. He maintained further that the first and third applicants are in a worse position as they are not even shareholders of Twin Oaks, but of another company, Purple Box.

[12]	Respondent’s counsel was steadfast in finally submitting that the fact that they had been sued by Double D.G. as sureties does not give them the legal interest in the application brought by the company.

[13]	It is common cause that the liquidation application is being opposed by Twin Oaks.  It is also not in dispute that there are several defences raised by Twin Oaks in support of its position, amongst others:-
-	that the claim applicant relies on is not for a liquidated amount;
-	that there are factual disputes that cannot be resolved by way of liquidation application;
-	that the respondent is not insolvent;
-	that the matter be referred to arbitration in terms of clause 12 of the agreement signed by the parties, and per further election which was done in writing by the applicant’s (Double D.G. ) attorney.

[14]	It is further common cause that the applicants in this matter, especially the first to fourth applicants were sued by Double D.G. as sureties in the matter although they are real shareholders in Twin Oaks.  It is further common cause that the said matter is still pending before this court as the judgment against the applicant 1 - 4 in this matter were rescinded and were given leave to defend.

[15]	In this matter, the purpose of the application for liquidation is nothing less that the collection or recovery of an alleged claim from Twin Oaks which is firstly, the same subject matter in the action against the applicants in the rescinded judgment as sureties, secondly, seriously disputed by both Twin Oaks and the applicants in this matter.  I do not see any reason why Double D.G. opted to issue summons against sureties only opting for a trial process whilst it does not issue summons against the principal debtor and instead, bring an application for liquidation in the face of all the disputes being known to it regarding its alleged claim.

[16]	In the case of Ex Parte Sudurhavid (Pty) Ltd: In re Namibia Resources (Pty) Ltd v Ferreira (Pty) Ltd 1993 (2) SA 737 (Nm) the following was said which I find apposite in this matter:

“Court held, accordingly, in an application for leave to intervene in proceedings for the provincial winding-up of a company, that the fact that the intervening party could not show that it was a person liable to be joined as a respondent in the winding-up proceedings did not prevent the Court from granting the application for leave to intervene.  The decisive criterion was whether the intervening party had a direct and substantial interest in the winding-up proceedings.  The Court pointed out that the intervening party and the applicant in the winding-up proceedings were the only shareholders in the company which was the subject of winding-up proceedings, and that they operated the company in a relationship which was in essence, one of corporate partnership.  The Court held, accordingly, that the winding-up proceedings concerned the basic right of the company to continue to exist and that the intervening party had a direct and substantial interest in that right.  The Court held further that if the company was dissolved, the ‘corporate partnership’ would suffer the same fate.  The intervening party was held, therefore, not only to have a direct and substantial interest in the winding-up proceedings, but also that it would clearly be prejudiced if a winding-up order was made.  The application for leave to intervene was accordingly granted”. [My own emphasis]

[17]	The fifth applicant (Purple Box) is therefore by virtue of the application of the principles as laid down in the above quoted case, regarded as having direct and substantial interest by virtue of him also being a shareholder in Twin Oaks.

[18]	In as far as the first to the fourth applicants are concerned, their case is stronger than that of Purple Box.  This is so because, by virtue of the fact that they are sued by Double D.G. as sureties and further that the very same Double D.G. had agreed to grant them in the rescission of judgment between the two parties, leave to defend the matter,   their direct and substantial interest is somehow enhanced in that they now have an opportunity to defend their claim against Double D.G. which may result in the company’s alleged debt (Twin Oaks) being non- existent.  They therefore do not only rely on the fact that being a shareholder gives them the direct and substantial interest in the liquidation application.

[19]	It goes without saying that since the first liquidation application had been launched by Double D.G. on 22 June 2010, serious prejudice has been suffered by Twin Oaks Development (Pty) Ltd and the applicants, both as shareholders and sureties.  By this way they are affected by the outcome of the liquidation proceeding.

[20]	Once this court has found that the applicants had direct and substantial interest in the liquidation application brought against Twin Oaks, it is trite law that joinder must be granted.  I may add that even on the other leg which the applicants were relying on, that of convenience, the facts of this matter speak for themselves that it is also in the interest of justice, convenience, and for the purposes of saving costs and multiplicity of actions which can lead to running the risk of conflicting judgments being given by different judges in different trials on issues that are common to all the actions, that joinder should be granted.  The factual and legal disputes that have to be  resolved amongst all the parties involved are the same.

[21]	The following order is thus made:-

21.1	The first to the fifth applicants are granted leave to intervene in the application under case no. 1365/2011 brought by the above mentioned applicant (Twin Oaks) in terms of Section 6(1) of Act 42 of 1965 as second to the sixth applicants.

21.2	That the cost of this application be costs in the main application.

    
________________ 
A M KGOELE
JUDGE OF THE HIGH COURT

ATTORNEYS:

FOR THE APPLICANT		:	Nienaber & Wissing Attorneys
FOR THE RESPONDENT	:	Van Rooyen Tlhapi Wessels Attorneys